Piscataway-based QualCare, a major provider of managed healthcare plans to employers, has chosen Madison-based Quest Diagnostics as its exclusive commercial laboratory services provider.

The move is directly related to the Affordable Care Act.

Kevin Joyce, vice president of network and delivery systems for QualCare, said the deal will help QualCare meet the ACA's goals of higher quality at a more affordable cost. He said QualCare solicited a request for proposals from the laboratory sector that resulted in the exclusive Quest contract.

Financial terms were not disclosed, but Joyce said QualCare expects to see a 15- to 20-percent reduction in lab spending from what QualCare is currently seeing. QualCare processes about $1 billion in medical claims a year, and lab services account for about 3 to 5 percent of that spend.

"As we move forward under health care reform, we were really looking for a partner that can work hand and hand with us to provide physicians with the data analytics that they need," Joyce said.

QualCare is working with accountable care organizations around the state that are seeking to better monitor population health, and Quest will provide tools for those initiatives.

"(One goal) is getting the pricing that we needed to be more competitive," Joyce said. "The other piece is that we are working with physician group in the development of ACOs in New Jersey. A lot of this is about patient coordination and making sure the providers get the information they need to coordinate patient care."

Joyce said QualCare had been using more than 20 different labs.

"Quest will give us data we can share with the providers," he said. "With smaller laboratories, it was difficult to obtain that data to share back with the providers."

Data on patient health — for example whether the individual had been tested for high cholesterol — is part of "the focus is on wellness," Joyce said.

Employers are giving employees incentives to obtain certain wellness metrics, and lab results are part of that.

There may be certain tests that Quest doesn't offer, but Joyce feels there is a workaround.

"If they can't provide a test we will work with them to find a vendor that does provide it," he said. "Our projections are that this will be very minimal."

In addition to its headquarters in Madison, Quest has a major clinical laboratory in Teterboro and dozens of facilities and patient service centers across the state.

Annette Catino, chief executive of QualCare, praised the deal.

"(Quest) is the leader in diagnostic information services and they share our commitment to patient care and excellence in innovation and service," she said. "We look forward to expanding our relationship with Quest to bring new capabilities in diagnostic information services to our members and clients."

"QualCare has built a position as a leader in creating health plan management options for the past 20 years that help improve the quality and lower the cost of health care services," he said. "We are proud to work with a fellow New Jersey-based health care leader, and excited by the opportunity to empower QualCare's commercial clients with diagnostic insights in order to improve the health of people in New Jersey."

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Beth Fitzgerald

Beth Fitzgerald reports on health care, small business and higher education. She joined NJBIZ in 2008 after a 34-year career at the Star-Ledger and has been reporting on business in New Jersey since 1978. Her email is beth@njbiz.com and she is @bethfitzgerald8 on Twitter.